A network experiment in continuous time : the influence of link costs

Berninghaus, Siegfried ; Ehrhart, Karl-Martin ; Ott, Marion

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URL: http://ub-madoc.bib.uni-mannheim.de/2676
URN: urn:nbn:de:bsz:180-madoc-26767
Document Type: Working paper
Year of publication: 2005
The title of a journal, publication series: None
Publication language: English
Institution: School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series: Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
Subject: 330 Economics
Classification: JEL: C92 C78 C72 ,
Subject headings (SWD): Netzwerkmanagement , Kosten , Spieltheorie , Nash-Gleichgewicht , Soziales Netzwerk
Keywords (English): Network formation , Nash networks , real-time network experiments
Abstract: In recent work on non-cooperative network formation star-shaped networks play an important role. In a particular theoretical model of Bala and Goyal (2000) center-sponsored stars are the only strict Nash networks. In testing this theoretical model Falk and Kosfeld (2003) do not find any experimental evidence that players select the center-sponsored star. Based on a slight modification of Bala and Goyal's model we design a network formation experiment with varying link costs in which almost all groups not only reach a strict Nash network once but also switch strict Nash networks several times. The main innovation in our experiment is to use a continuous time framework which makes coordination on "stars" much easier than simultaneous strategy adaptation in discrete time.
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